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Monday, August 19, 2013

Homeowners Association New Legal Requirements

The new amendments to the Homeowner Association Act went into effect July 1, 2013. This created new obligations and restrictions
for Homeowner Associations and their Board of Directors as follows:

1. All Homeowners Associations must register
with the Department of Business and Professional Regulation by November 22,
2013. The format for registration is
expected to be available online by October 1, 2013. Information to be given includes the
Homeowner Association’s legal name, federal employer identification number,
mailing and physical addresses, the total number of parcels/units, and the
total amount of revenues and expenses from the Homeowner Association’s annual
budget.

2. The new records retention requirements
now mirror the existing Condominium Act, including a requirement for records to
be maintained for seven years and the records must be maintained within
forty-five miles of the community or within the same county. Homeowners Associations are also allowed to
maintain Association records electronically via the Internet or on portable
media such as cd-roms or thumb drives in lieu of providing paper copies. The right to charge for copy costs has been
reduced to $.25 per page, and personnel costs for requests that exceed one-half
hour or more than twenty-five pages is limited to a charge of $20.00 per hour.

3. Each new board member must certify,
within ninety days of election or appointment that they have read the governing
documents and will uphold them to the best of their ability and that they will
faithfully discharge their fiduciary responsibility to the Association or, in
the alternative, that they have satisfactorily completed an educational curriculum
administered by a division-approved association education provider. Our firm provides free forms for completion
via e-mail request at mjposner@warddamon.com
(please put Director Certificate in the subject line).

4. All Homeowners Associations must obtain a
Fidelity Bond/Crime and Fidelity Insurance. This requirement can be waived by a
majority vote at an annual or special meeting of the members in the same manner
as other permissible waivers. No minimum
coverage amount is currently set forth in statute, but we are recommending not
less than $100,000.00 for small Associations, with larger amounts for large
Associations.

5. Contracts with Board of Director members
must now be approved by a 2/3rds vote of the Board (and excluding the vote of
the Director involved), and the vote must include a finding that the contract
is both fair and reasonable. After
approval, Board of Directors must disclose the contract at next member
meeting. Any member at that meeting can
make a motion to cancel the contract and if cancelled by a majority vote, the contract
is void. Therefore, any contracts signed
by the Association must include a termination provision without penalty if the
members vote to cancel the contract.

6. The new law now prevents officers,
directors and property managers from receiving any good or services without
payment (or reduced payment) from any third party soliciting or providing
services to the Homeowners Association in a way to cut back on kick-
backs. One exception is for meals not to
exceed $25.00 as part of a business meeting or items at trade fairs or
education programs. Violation of this
new law means immediate expulsion from the violator’s position.

7. Any director or officer charged with a
theft of Homeowners Association funds must be immediately removed from office,
but if charges are dropped or the person is acquitted they must be reinstated
to the same office within the Association.

The new laws
impose greater burdens on Homeowners Associations, in a push to add further
condominium like regulations of Homeowners Associations. Each Board member should carefully review the
law to insure timely compliance.

Michael
Posner, Esq., is a partner in Ward Damon a mid-sized real estate and business
oriented law firm serving all of South Florida, with offices in Palm Beach
County. They specialize in real estate
and can assist community associations in all legal matters. They can be reached at 561.594.1452, or at
mjposner@warddamon.com

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About Me

I am a Florida Board Certified Real Estate Attorney with 30+ years of residential and commercial real-estate experience.
I am an equity partner in Ward, Damon, Posner, Pheterson & Bleau, a mid-sized law firm serving all of South Florida, with three offices in Palm Beach County. Our firm specialize in and can assist in buying, borrowing and selling property throughout South Florida. I can be reached at 561.594-1452, mjposner@warddamon.com or www.warddamon.com